codypd
Short

Using Contango / Backwardation channels to predict UVXY prices

2313 9 8
UVXY             contango is fairly reliable except when sustained high VIX             numbers are posting, The ratio of UVXY             to VIX             reveals contango / backwardation channels that are predictive to the degree that any trend channel is. This is very helpful as a ratio to forcast UVXY             relative to the VIX             .

Pictured is the current channel with an elipses and "price" tags at the upcoming April 17 close. Heiken Ashi used to more clearly spot significant contango / backwardation pivots . Note that the underlying for UVXY             is VXX             futures , so the contango / backwardation well known to VXX             gets compounded with UVXY             .
Is this where we should get into uvxy?
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Very nice.
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Where is this going?
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codypd AshYo
Over time UVXY will go down. As longe as people in general are less certain about events 90 days out than they are about events 30 days out, UVXY will go down. It is hardwired for that.
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codypd codypd
lots of fat finger typos lately from me ... "As long as"
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decameca codypd
@codypd, I know this is old, but hoping you're around to answer. If people are "less certain about events 90 days out than about 30 days about", why does this drive UVXY down? Or more clearly, if people are more certain about the midterm than the long term, how is this reflected in the prices? VIX goes down and VXV, say, goes up?
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I love this chart. Could you explain a bit more how you use it? For example do you short UVXY when it's in a downward channel and buy it when there is a channel break? Any advice would be greatly appreciated.
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codypd Algyros
I monitor the channel every few days to make sure we are still in it. I use the VIX/VXV ratio to look for any coming backwardation ( which throws us out of this channel) and then enter shorts / buy puts on pops over VIX=15 and then cover on a 7% trail or when VIX hits low 12s. I am working on indicators to get me tighter entries and exits and will publish them when they've made me money.
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I have an updated version of this now that the reverse split has messed up the chart.
The UVXY/VIX contango channel is intact. July projection posted
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